“There is going to be a point when the market turns,” warns Stan Razny, owner and president of Chicago’s Razny Jewelers, the city’s only retailer of both Patek Philippe and Rolex across four stores.
“It is easy to sell two or three models that are in high-demand when available. Sustaining excitement for weeks or months, however, is more complicated,” he adds.
Mr Razny’s warning comes at a time when the major watch groups, in particular Richemont, are crowing about the rise in direct to consumer sales.
According to the $20 billion Richemont group’s report for the 2022-23 financial year, direct sales now account for 56% of turnover for its Specialist Watchmakers.
This does not include Cartier or Van Cleef & Arpels, which are categorised as Jewellery Maisons, where 83% of sales were made through directly-owned showrooms.
In addition to direct sales through monobrand boutiques in major global cities, Richemont is also rolling out TimeVallée multibrand retail concept, starting in Asia and now encroaching into the Middle East and Europe.
Mr Razny has utmost respect for watch manufacturers. But he points out that they should stick to what they do best, and leave retail to the experts as well.
“We, as luxury retailers, understand it is very difficult to manufacture a high-end timepiece. On the other hand, brands must understand that great skill is required to get a watch on a customer’s wrist and ensure they are so pleased with the process that they want to do it again,” he tells WatchPro in our Big Interview to be published in the July editions.
It is remarkable how readily the groups discard the broad and deep set of skills deployed by retailers, not just from 9 ’til 5, but 24 hours per day, 365 days per year.
“In a corporate store, there is a tendency to see work as 9-to-5. For our family and team, we are working 24-7, constantly engaging with our customers. This level of care makes a massive difference. Our customers are hard-working and successful, but they are usually time-poor. They may have no recourse but to reach out to us at some of the craziest times of the day,” Mr Razny explains.
“Sometimes I will get a text at 3 am from a customer in another part of the world. Corporate stores are not going to be as approachable, flexible, and available for customers. Luxury brands appreciate being represented by someone with this level of dedication. They understand that to delight customers today, this commitment is needed,” he insists.
I expect we are about to find out who is right.
In the last three months of 2022, Richemont’s Specialist Watchmakers, home to A. Lange & Söhne, IWC, Jaeger-LeCoultre, Panerai, Baume & Mercier and Vacheron Constantin, saw global sales fall by 5%, led by double digit falls in Asia Pacific, where the group’s direct to consumer corporate stores are most dominant.
Growth in the Americas for all of Richemont’s portfolio slowed to 3% in the final three months of last year. That was a far from unimpressive result, given how hot the market was in 2021, but we will see whether any growth can be maintained in Western markets this year.
Branded boutiques give themselves a number of advantages over retailers. They are located in the most expensive locations in the world (5th Avenue, Place Vendome, Bond Street) but are not required to make profits because any losses are attributed to the marketing value of storefronts in these positions.
And they keep the most desirable, and heavily promoted, boutique-only watches for themselves while retailers have to keep selling core collections.
Even so, Mr Razny believes retailers will prevail.
“Corporate stores sometimes benefit from preferred watch allocations, but a family business outperforms them every day of the week because we never shut off. We are constantly engaged with our stores, teams, and customers. I am continually listening, answering questions, and learning from them,” he concludes.
I suggested this would happen with ALL brands (Watches, Jewellery, Fashion, Cars) some fifteen years ago and the argument then was did brands have sufficient retail skills? The answer is very simple, retailers are training the brands future skill base and management is available off the shelf for the right £, € or $.
I think there is definitely a place for the ‘traditional’ thrid party AD/retailer however Im still not sure where that will be. One thing I think we need to be careful of is basing our ideas on stereotypes on how things used to be (or worse, how you wish they were). I’ve got to say that over the past 2 years my best retail experiences have come from brand run boutiques (Breitling and JLC). These boutiques were everything – and more – that I could ever want from a buying experience, I still drop into boutiques to say hi to the staff, I still get the odd personalized email to catch up on what’s happening and I can call ‘my guy’ in the boutiques if/when I need to. Assuming all brand boutiques will be corporate ‘bots’ is a dangerous assumption.
As an independent after sales US watchmaker, I think the same principle applies; namely that watch brands’ service centers and customer service will never beat retailers and independent service centers .
The watch brands are all consistently unwilling and unable to provide excellent customer service and efficient turnaround times for servicing their customer’s watches. This is primarily due to their lack of commitment to sufficient capacity in terms of facilities, equipment and well-trained service personnel to service watches in a timely manner. It’s the dirty (big) secret of the luxury watch industry that customers will always pay much more and wait much longer to get their watch serviced by the brand directly, compared to independent service centers.
Despite this fact, many brands inexplicably refuse to sell parts to independent service centers, thereby perpetuating this ridiculous situation. Shame on them for their poor commitment to customer service. They either need to greatly expand their service center capabilities and/or provide more training and parts accounts for independent service centers. We all want to service watches properly per brand standards and provide excellent customer service, but many brands resist this vehemently, while providing inadequate customer service themselves.
I think we all know that the “Big R” brand is the worst offender. Their TX service center only has the capacity to service roughly 25-30k watches per year, despite the huge portion of their approximately one million annual watch production being sold in the US. At least Richemont and Swatch offer training and parts accounts for many of their brands to qualified independent service centers.